1. Congestion Management
ERGEG Recommendations for Guidelines Adopted via a Comitology Procedure
Stefanie Neveling (BNetzA)
Madrid Forum, 14 January 2010

2. Contents Why are new rules on congestion management necessary?
ERGEG proposals and Impact Assessment
ERGEG Recommendations and Way Forward

3. Background Physical congestion occurs rarely: Actual flows in 2009
<70% of technical capacity
70-80% of technical capacity
80-90% of technical capacity >90% of technical capacity
365 days
Actual flows in 2009
Source:

4. General Issues Scope of guidelines
Rules apply to cross-border points between adjacent entry-exit-systems where subject to booking procedures.
Capacity management clauses in existing contracts shall be amended in line with the implemented provisions.
Network users shall be entitled to reduce their capacity bookings during transitional period.
NRAs shall ensure that TSOs have incentives to achieve the aim of Guidelines.

5. Capacity Maximisation
TSOs to offer the maximum amount of firm capacity that can be offered for use without restrictions.
Technical capacity to be calculated through transparent methodologies, using best available and cost-efficient procedures
Dynamic calculation of available capacity – TSOs shall regularly re-calculate capacity based upon actual technical conditions (e.g. temperature)
Impacts: How will additional firm capacity impact interruptible contracts?
Risk of being interrupted may increase, but additional firm capacity will be available

6. Oversubscription and Buy-Back
TSOs to implement mechanisms to offer additional firm short-term and longer term capacity
Based on statistic scenarios an extra amount of capacity exceeding the capacity previously calculated to be offered
In case of actual physical congestion transmission system operators shall tender for buying back capacity.
TSOs to estimate the possibility and the costs of buying back capacity on the market and to reflect this in the amount of additional capacity
The mechanisms and possible transition periods for the implementation of these mechanisms are subject to review by NRA

7. Oversubscription and Buy-Back
Impacts:
What is the expected impact on availability of capacity?
Based on over-subscription TSOs should be able to offer additional long-term capacity
mechanism does not touch existing contracts
How often will buy-back take place?
Based on current utilisation rates actual buy-back is expected to happen rarely
As a consequence costs will be rather low

8. Firm day-ahead UIOLI
Where demand for firm day-ahead capacity exceeds the offer, NRAs to decide on firm day-ahead UIOLI procedure
To this end, NRAs may reduce or remove existing re-nomination rights reflecting
requirements at specific points
the share of the booking of particular network users
the users’ objectively justified needs
Day-ahead capacity set free by this mechanism to be allocated by auction only
The offer and allocation of day-ahead capacity shall be performed in such a way that buyers can take part in daily gas trading

9. Firm day-ahead UIOLI
Impacts:
How are shippers affected by restriction of re-nomination rights?
Big portfolios can better cope with unexpected events and therefore may not need full re-nomination rights
Small portfolios to be protected (e.g. “2+2”)
How are portfolios containing many gas fired power stations affected?
In big portfolios with many power stations fluctuations are neutralised against each other
Smaller portfolios can explicitly be protected
Therefore: No interference with electricity markets expected

10. Firm day-ahead UIOLI Impacts:
How does a restriction of re-nomination rights impact balancing?
Portfolio balancing: Expected increase of liquidity of gas markets will help to avoid imbalances
System balancing: Where a system is short system balancing energy can be provided on interruptible capacity

11. Withdrawal of Underutilised Capacity
The procedure requires:
shippers request capacity and unable to obtain this capacity on the primary or secondary market;
capacity holder systematically underutilizes allocated capacity
capacity owner has not sold or offered the capacity and is unable to satisfactorily justify the behaviour
The capacity holder can
lose capacity rights for a given period or for the remaining term
be limited in nomination rights for a given period to the maximum flows of the previous year.

12. Recommendations and Way Forward
ERGEG sees urgent need to improve congestion management in Europe
Stakeholder Workshop on 2 February 2010
Binding rules are needed for the implementation of harmonised access conditions
ERGEG invites Commission to consider adoption of binding guidelines on congestion management via comitology
ERGEG recommends speedy adoption during the ‘interim period’ – waiting for the third package entering into force is no option
Pragmatic approach preferred either under current Regulation or anticipating the new Regulation
ERGEG is prepared to contribute to the next steps on this issue

13. Thank You!